The Price of Cereal Rises

question 283

Multiple Choice

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of

• A) a decrease in the quantity demanded of cereal because of the substitution effect.
• B) an increase in the quantity demanded of eggs because of the income effect.
• C) a decrease in the quantity supplied of cereal because of the substitution effect.
• D) an increase in the quantity supplied of eggs because of the income effect.